Discussing AAVE's V4

The core of Aave V4 lies in two new concepts: Liquidity Hub + Spokes, aimed at addressing the issues of fragmented liquidity and inefficiency.

Step 1: On-Chain Integration, Centralized Asset Management

Previously, on the same chain (like Ethereum), Aave would open multiple markets, such as Core, Prime, and EtherFi, leading to fragmented funds and low efficiency.

The approach in V4 is to: keep only one Liquidity Hub, where all funds are centrally managed. Borrowers with different needs can connect through Spokes, customizing parameters like interest rates and risk, allowing for flexible combinations like building with Lego, without the need to open new markets.

As a result:

• Funds are centralized, improving borrowing efficiency

• Reduced user migration costs

• Project teams can freely configure rules, leading to a more flexible experience

Step 2: Cross-Chain Integration, Creating a Unified Market

Next, Aave aims to unify asset management across different chains, enabling funds from ETH and Polygon chains to be used together.

This requires leveraging cross-chain technology, currently mainly relying on Chainlink's CCIP, which allows secure communication between chains. However, cross-chain integration also introduces new risks.

Once successful, Aave will achieve its ultimate goal of a "Unified Lending Market Across All Chains."

What are Spokes?

Spokes are the lending interfaces that connect to the Liquidity Hub. Each Spoke can set its own lending rules, similar to Uniswap's Hooks, emphasizing “personalization” and “modularity.”

Summary

V4 has two steps: First, addressing the fragmentation of on-chain funds, and in the future, achieving cross-chain unified lending. Short-term experience enhancement, long-term structural change. Aave is potentially building the ultimate form of DeFi lending, with Chainlink's role becoming increasingly crucial.